Judge allows suit challenging pension plan

Tue, 2012-12-04 18:55

BATON ROUGE (AP) — A state judge refused Monday to dismiss a lawsuit that challenges the constitutionality of a pension plan for future state employees.

The Retired State Employees Association of Louisiana filed suit in August, alleging the law establishing a 401(k)-type pension plan for future employees did not get a constitutionally required two-thirds vote in the 2012 legislative session.

The Advocate reports Gov. Bobby Jindal’s administration had asked District Judge William Morvant to throw out the suit, claiming the association and individual plaintiffs did not have legal standing to file suit.

Morvant disagreed at the conclusion of a hearing Monday and set a Jan. 24 trial date.

The administration contends the law was legally approved by the Legislature.

The new plan, scheduled to go into effect in July 2013, would operate similar to a private-sector 401(k) except funds would be protected from investment losses.

An employee would contribute 8 percent of pay and the state would contribute 4 percent with all but 1 percent of the investment earnings attributed to the account. The 1 percent would be set aside in a reserve fund as a hedge against investment losses.

The Louisiana State Employees Retirement System opposed the plan, contending it would not provide sufficient retirement income for state employees who have no Social Security safety net.

Jindal has argued the plan would help stem increasing state retirement system financial liabilities while providing sustainable pension benefits.

State employees currently have a “defined benefit” plan that guarantees lifetime benefits at a certain level based on years of service and compensation. Jindal contends that plan is too expensive for the state.